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Downsizing Blog

I recently discussed why the additional federal subsidies for state and local government that President Obama is proposing as part of his “job plan” are a bad idea. A new study from two Harvard economists suggests that the president’s affinity for these subsidies might have something to do with the fact that the aid would be particularly helpful to states with more left-leaning legislators and strong public sector unions.

The details surrounding the $535 million government loan to Solyndra – the now-bankrupt solar energy company that had been the green apple of the president’s eye – are still emerging. It remains to be seen whether or not the Obama administration broke any laws when it pushed the loan out the door despite obvious problems with the company’s finances.

Earlier this week, the House Armed Services Committee Republican staff released a video using the anniversary of September 11 to argue for higher military spending while pretending that lately we have cut the defense budget. Chris Preble and I rebutted these outlandish claims, and Evan Banks made our comments into a cool video:

I can’t look into President Obama’s heart, so I can’t tell you what motives are driving the American Jobs Act. I can, though, tell you this: One look at the facts about American education, and his proposal only makes sense if the goals are to energize union support, and perhaps use spending as some easy shorthand to tell voters that the President cares about kids.

The Senate Homeland Security and Government Affairs Committee held a hearing this week on the U.S. Postal Service’s dire financial situation. The USPS is facing a $10 billion loss this year, is about to max out its $15 billion line of credit with the U.S. Treasury, and doesn’t have the money to make a required $5.5 billion payment for retiree health care benefits due at the end of the month. The USPS is projecting insolvency in 2012 if Congress doesn’t step in to provide relief.

The Washington Post reports on a Labor Department decision that applies pro-union Davis-Bacon rules to the CityCenter development in Washington D.C. The ruling could push up costs on the project by $20 million by forcing firms to pay artificially high wages.

According to Lloyd Chapman, the hyperbolic president of the American Small Business League, legislation introduced by Sen. Richard Burr (R-NC) would close the Small Business Administration. Chapman actually stated on a Fox Business News show that Burr’s bill is “the worst idea in the history of America.” And here I thought it was Rick Santorum’s decision to run for president.